Inter Pipeline Ltd CAPEX dropped on 45.5% in 2016 while Revenue increased on 8.8%
16.02.2017 • About Inter Pipeline Ltd (
$IPL) • By InTwits
Inter Pipeline Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Inter Pipeline Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 57.0%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 186 in 2016, 342 in 2015, 1,236 in 2014, 1,948 in 2013, 384 in 2012
- The company has business model with low profitability: ROIC is at 8.5%
- It operates with high leverage: Net Debt/EBITDA is 5.8x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Inter Pipeline Ltd ($IPL) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,206 | 1,363 | 1,556 | 1,676 | 1,825 | 8.8% |
| Gross Profit | 699 | 776 | 891 | 1,112 | 1,249 | 12.4% |
| SG&A | 64 | 77 | 86 | 63 | 134 | 112.5% |
| EBITDA | 589 | 616 | 700 | 981 | 1,006 | 2.5% |
| Net Income | 307 | -58 | 335 | 427 | 450 | 5.2% |
Balance Sheet
|
|---|
| Cash | 65 | 47 | 61 | 40 | 21 | -46.9% |
| Short Term Debt | 1,351 | 1,597 | 1,428 | 1,384 | 1,739 | 25.6% |
| Long Term Debt | 1,761 | 2,516 | 3,144 | 3,422 | 4,068 | 18.9% |
Cash flow
|
|---|
| Capex | 384 | 1,948 | 1,236 | 342 | 186 | -45.5% |
Ratios
|
|---|
| Revenue growth | 4.7% | 13.0% | 14.2% | 7.7% | 8.8% | |
| EBITDA growth | 12.6% | 4.6% | 13.7% | 40.1% | 2.5% | |
| Gross Margin | 57.9% | 56.9% | 57.3% | 66.3% | 68.5% | 2.1% |
| EBITDA Margin | 48.8% | 45.2% | 45.0% | 58.5% | 55.1% | -3.4% |
| Net Income Margin | 25.5% | -4.3% | 21.5% | 25.5% | 24.6% | -0.9% |
| SG&A, % of revenue | 5.3% | 5.7% | 5.5% | 3.8% | 7.3% | 3.6% |
| CAPEX, % of revenue | 31.9% | 143.0% | 79.4% | 20.4% | 10.2% | -10.2% |
| ROIC | 9.5% | 8.0% | 7.5% | 9.6% | 8.5% | -1.0% |
| ROE | 19.9% | -3.1% | 14.4% | 15.9% | 15.0% | -1.0% |
| Net Debt/EBITDA | 5.2x | 6.6x | 6.4x | 4.9x | 5.8x | 0.9x |
Inter Pipeline Ltd ($IPL) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 416 | 413 | 435 | 561 | 2.6% | 5.7% | 2.4% | 23.0% |
| EBITDA | 227 | 250 | 247 | 282 | -2.9% | 12.6% | -2.4% | 3.6% |
| Net Income | 96 | 114 | 114 | 126 | -15.8% | 75.2% | -4.2% | -3.0% |
Balance Sheet
|
|---|
| Cash | 28 | 40 | 70 | 21 | -56.3% | -45.0% | 19.6% | -46.9% |
| Short Term Debt | 1,373 | 1,757 | 1,749 | 1,739 | -3.1% | 24.8% | 25.2% | 25.6% |
| Long Term Debt | 3,451 | 3,053 | 3,828 | 4,068 | 6.4% | -11.1% | 10.7% | 18.9% |
Ratios
|
|---|
| Gross Margin | 69.1% | 71.3% | 68.8% | 65.7% | 3.6% | 5.5% | 2.1% | -2.0% |
| EBITDA Margin | 54.5% | 60.6% | 56.8% | 50.3% | -3.1% | 3.7% | -2.8% | -9.4% |
| Net Income Margin | 23.0% | 27.7% | 26.2% | 22.4% | -5.0% | 11.0% | -1.8% | -6.0% |
Revenue and profitability
The company's Revenue increased on 8.8%. Revenue growth showed acceleration in 16Q4 - it increased 23.0% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 23.8 pp from 21.1% to 44.9% in 2016.
Gross Margin increased on 2.1 pp from 66.3% to 68.5% in 2016. SG&A as a % of Revenue increased on 3.6 pp from 3.8% to 7.3% in 2016.
Net Income marign decreased slightly on 0.85 pp from 25.5% to 24.6% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Inter Pipeline Ltd had CAPEX/Revenue of 10.2%. CAPEX/Revenue dropped on 133 pp from 143% in 2013 to 10.2% in 2016. For the last three years the average CAPEX/Revenue was 36.7%.
Return on investment
The company operates at good ROE (14.97%) while ROIC is low (8.54%). ROIC decreased slightly on 1.0 pp from 9.6% to 8.5% in 2016. ROE decreased slightly on 0.95 pp from 15.9% to 15.0% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.8x and Debt / EBITDA is 5.8x. Net Debt / EBITDA jumped on 0.9x from 4.9x to 5.8x in 2016. Debt jumped on 20.8% while cash dropped on 46.9%.
Management team
Inter Pipeline Ltd's CEO Christian P Bayle is a founder and has spent 4 years at the company. Inter Pipeline Ltd's CFO Brent C Heagy has spent 4 years at the company.
Appendix 1: Peers in Energy
Below we provide Inter Pipeline Ltd benchmarking against other companies in Energy industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | -18.4% | 141.2% |
| Seven Generations Energy Ltd ($VII) | | 115.7% | 340.2% | 39.0% | 94.4% |
| Athabasca Oil Corp ($ATH) | | 342.7% | 5.5% | -22.9% | 73.1% |
| Painted Pony Petroleum Ltd ($PPY) | | 41.3% | 56.0% | -42.5% | 60.7% |
| ONEnergy Inc ($OEG) | | | 6,002.6% | 231.5% | 57.4% |
| |
|---|
| Median (116 companies) | | 16.2% | 17.0% | -29.5% | -19.1% |
|---|
| Inter Pipeline Ltd ($IPL) | | 13.0% | 14.2% | 7.7% | 8.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($BOE) | 77.1% | 43.3% | -34.3% | 121.1% | |
| TransAlta Renewables Inc ($RNW) | | 94.4% | 94.5% | 94.5% | 91.1% |
| Serinus Energy Inc ($SEN) | 80.5% | 76.5% | 86.8% | 88.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 62.0% | 84.5% | 92.5% | 88.5% | 90.3% |
| Polaris Infrastructure Inc ($PIF) | 39.9% | 33.6% | 32.0% | 86.7% | 88.6% |
| |
|---|
| Median (114 companies) | 32.0% | 32.1% | 32.2% | 33.6% | 31.5% |
|---|
| Inter Pipeline Ltd ($IPL) | 57.9% | 56.9% | 57.3% | 66.3% | 68.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($GXO) | 59.4% | 64.5% | 70.8% | 201.9% | |
| Perpetual Energy Inc ($PMT) | 35.5% | 70.7% | 58.0% | 110.3% | |
| Petro Rio SA ($PRJ) | -4,809.7% | -6,899.7% | 28.2% | 90.7% | |
| Peyto Exploration & Development Corp ($PEY) | 86.1% | 83.2% | 86.3% | 84.6% | 80.7% |
| Innergex Renewable Energy Inc ($INE) | 111.8% | 110.0% | 82.9% | 83.4% | 83.5% |
| |
|---|
| Median (128 companies) | 25.3% | 34.1% | 28.9% | 8.1% | 27.3% |
|---|
| Inter Pipeline Ltd ($IPL) | 48.8% | 45.2% | 45.0% | 58.5% | 55.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | 1,997.8% | 712.8% | |
| WesternZagros Resources Ltd ($WZR) | | | | 385.6% | |
| Athabasca Oil Corp ($ATH) | 2,426.4% | 596.6% | 504.7% | 315.2% | 83.7% |
| TORC Oil & Gas Ltd ($TOG) | 453.8% | 466.9% | 104.5% | 229.4% | 76.3% |
| Seven Generations Energy Ltd ($VII) | 452.8% | 513.1% | 227.4% | 191.2% | 73.5% |
| |
|---|
| Median (129 companies) | 43.8% | 39.0% | 45.0% | 28.1% | 23.8% |
|---|
| Inter Pipeline Ltd ($IPL) | 31.9% | 143.0% | 79.4% | 20.4% | 10.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($ERF) | -17.3% | 10.2% | 11.5% | -55.5% | 16.3% |
| Whitecap Resources Inc ($WCP) | 7.1% | 8.1% | 9.6% | -10.6% | 10.1% |
| Ecopetrol SA ($ECP) | 29.3% | 24.4% | 16.5% | 3.0% | 9.6% |
| Parkland Fuel Corp ($PKI) | 22.3% | 23.3% | 9.9% | 7.8% | 8.6% |
| Pembina Pipeline Corp ($PPL) | 8.2% | 8.5% | 7.6% | 6.3% | 6.9% |
| |
|---|
| Median (128 companies) | 3.6% | 5.4% | 5.5% | -8.5% | -1.9% |
|---|
| Inter Pipeline Ltd ($IPL) | 9.5% | 8.0% | 7.5% | 9.6% | 8.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($PXX) | -0.2x | -0.1x | 0.2x | 3,726.1x | -0.2x |
| Paramount Resources Ltd ($POU) | 14.6x | 23.9x | 8.9x | 421.5x | -5.8x |
| Precision Drilling Corp ($PD) | 2.2x | 1.9x | 2.0x | 68.4x | 7.6x |
| Trican Well Service Ltd ($TCW) | 2.5x | 3.4x | 2.9x | 31.4x | |
| Trilogy Energy Corp ($TET) | 2.6x | 1.8x | 2.3x | 25.5x | 7.3x |
| |
|---|
| Median (78 companies) | 1.5x | 1.4x | 1.4x | 2.6x | 2.6x |
|---|
| Inter Pipeline Ltd ($IPL) | 5.2x | 6.6x | 6.4x | 4.9x | 5.8x |
